ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Lower price for goods and services
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Reduced profit and cash flow for companies
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Increased spending on goods and services
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Oversupply of goods and services
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Detailed explanation-1: -Deflation reduces production of goods and services due to reduction in demand for goods and services from the consumers. Reduction in production of goods and services leads to reduced investments, reduction in the salaries of employees, and also increase unemployment.
Detailed explanation-2: -Causes of Deflation Causes of this shift include reduced government spending, stock market failure, consumer desire to increase savings, and tightening monetary policies (higher interest rates).
Detailed explanation-3: -The causes of deflation are decreased consumer demand, a fall in production cost, an insufficient supply of money and fierce competition in the market. Deflation results in a deflation spiral, higher unemployment, increased debt rates and reduced investment.
Detailed explanation-4: -Fall in the money supply. A central bank may use a tighter monetary policy by increasing interest rates. Decline in confidence. Lower production costs. Technological advances. Increase in unemployment. Increase in the real value of debt. Deflation spiral. 06-Dec-2022